1. The Super Muench (SM) Cookie Company is considering a diversification effort that would move it into small retail outlets at major malls around the country. Currently, SM has a capital structure consisting of 40 percent debt and 60 percent equity. SM believes that for the riskier retail outlet portion of its business, a more conservative capital structure of 30 percent debt and 70 percent equity is more appropriate. SM current pretax cost of debt is 8 percent. The firm's marginal tax rate is 25 percent. Another retail cookie company, Dietz's Dessertery, has been identified. Dietz has a (leveraged) beta of 1.35. Dietz's current capital structure consists of 25 percent debt and 75 percent equity. Dietz's tax rate is 30 percent. The risk-free rate is 4 percent and the expected return on the market is 12.3 percent. a. What is the unlevered beta for the risky retail division? b. What is the required rate of return on the equity-financed portion of the division's assets? c. What is the risk-adjusted discount rate of the division? d. SM wants to know what risk-adjusted discount rate is appropriate for investments in its retail outlet e. Spending proposal A has an IRR of 12 percent and Project B has an IRR of 14 percent. Should both projects be accepted? Explain briefly